3.4 Managing across interfaces
Increasingly, operations management is seen as an interface discipline (Voss, 1995). Managing across interfaces, both internal and external to the organisation, is a particular challenge for managers and this is discussed further in this section.
Information and communications technology is an important means of linking across the various interfaces. Box 1 outlines the capabilities of enterprise resource planning systems in this respect.
Box 1: Enterprise Resource Planning
Enterprise resource planning (ERP) systems organise and integrate all the information needed to manage processes effectively. Instead of all the various functions in an organisation using their own planning systems (typically separate ones for each of manufacturing, marketing, finance, etc.), ERP systems provide the means for all activities to share common databases. ERP systems are principally planning tools, allowing future needs for capacity, staffing, materials, and so on to be identified and assessed against expected levels of demand.
ERP systems have been available since the late 1990s, and have evolved from materials planning systems (such as MRP – materials resource planning). As computing power increased, so more and more information could be handled effectively, and the benefits of true integration of information across all functions in the enterprise could be realised. The benefits of implementing an ERP system can typically include: better utilisation of capacity and other resources, reduced inventory, accurate scheduling, and better service quality by meeting promised delivery dates better.
Large companies have grown up as suppliers of ERP systems. SAP, PeopleSoft, Oracle and Baan are names closely associated with their ERP products.
Given the nature of ERP systems – their intimate connection with organisation-wide information systems, their requirement for changed ways of working, and the large investment of financial, management and other staff resources required for their Introduction and implementation – it is not surprising that organisations opting for these systems have experienced problems in achieving the hoped-for benefits. Not only must the technical issues be addressed but also, and every bit as important, the organisational and people aspects. Thus companies providing ERP systems not only sell the hardware and software but also offer consultancy advice on the organisational changes needed to get the most out of the product.
The next generation of ERP tools will span inter-organisational boundaries so that suppliers and customers alike will have access to the same information to facilitate collaboration in the value creation process.
Figure 9 shows the traditional representation of ERP plus how it is likely to expand in the future.
While information and communications technology is extremely powerful it is never the only solution to managing processes that span intra- and inter-organisational boundaries. A discussion of a wider range of options and their benefits follows.